Direct Debit for Utilities NOT cheaper

lstar337

Autumnella wrote: »

If you prefer to pay for the energy you've used only why not see if your supplier offers a quarterly direct debit and see if you still get a discount by paying by direct debit?

We all pay for only what we have used.

Any excess is simply stored with the supplier and used for any shortfall, or it is refunded at the end of the year. The OP is talking crazy!:D

backfoot

Many excellent patient and thoughtful replies. The OP is struggling to get the penny to drop. One more try.

How much extra have they held in their account over and above your annual cost of energy? If you are on top of knowing your annual consumption and therefore your costs, it is easy to calculate.

Let's say they have made sure you are in credit to the tune of £100 (on average). That would equate to a loss of interest of £3 in a Santander 123 account.

Now, compare the cheapest DD tariff versus the cheapest non DD account. If it's less than £3, I would be astonished.

Posters here generally have no allegiance to the Suppliers and try to help and advise those seeking help or clarification.

It's entirely your choice at the end of the day.:)

vet8

I have come to this thread a few months late, but I must say something.

I agree with the OP entirely. I think that paying power bills by DD is a total con. In my personal experience I was always so much in credit at all times of the year that I had given the supplier an interest free loan. Even in the midst of winter I was owed at least £100 at the end of the billing period. Several times I complained and they reduced the DD for a brief period, but every time the amount they owed me dropped below £100 they raised the DD again.

I did not actually save any money, because regardless what the power cost, far more was coming out of my bank account over the course of the year than I had previously paid by quarterly billing.

When I left that supplier I eventually got the money back, but even that took months and several letters, phone calls etc. I read recently, on this site I believe, that power companies make 3 million pounds a year by overcharging users on DDs and then not repaying the excess when people move suppliers. That is why they are so keen on DDs.

backfoot

vet8 wrote: »

I have come to this thread a few months late, but I must say something.

I agree with the OP entirely. I think that paying power bills by DD is a total con. In my personal experience I was always so much in credit at all times of the year that I had given the supplier an interest free loan. Even in the midst of winter I was owed at least £100 at the end of the billing period. Several times I complained and they reduced the DD for a brief period, but every time the amount they owed me dropped below £100 they raised the DD again.

I did not actually save any money, because regardless what the power cost, far more was coming out of my bank account over the course of the year than I had previously paid by quarterly billing.

When I left that supplier I eventually got the money back, but even that took months and several letters, phone calls etc. I read recently, on this site I believe, that power companies make 3 million pounds a year by overcharging users on DDs and then not repaying the excess when people move suppliers. That is why they are so keen on DDs.

If you let us know :

Partial postcode
Current Supplier and tariff.(from your latest bill )
Annual consumption (KWh) for both gas and electricity.

We will tell you how much extra you are paying to avoid payment by Direct Debit.

vet8

backfoot wrote: »

If you let us know :

Partial postcode
Current Supplier and tariff.(from your latest bill )
Annual consumption (KWh) for both gas and electricity.

We will tell you how much extra you are paying to avoid payment by Direct Debit.

I am at work at the moment so I do not have that info with me, but I think you are missing the point.

When we switched and started paying by DD, we had paid approx. £300 a year for the past 3 years. The new company wanted to set up a DD for £35 a month - that comes to £420 a year, far more than we had ever paid before. I complained and it was lowered to £18 a month as they said they would save me £80 a year. Within 6 months it was £54 a month (that is electricity only, we have no gas). From then we were constantly owed at least £100 at all times of the year.

Now even if paying by DD saves me say £50 over the course of the year it is no saving at all if I am actually paying out of my bank account an extra £100 a year or more. the saving is illusory.

backfoot

vet8 wrote: »

. From then we were constantly owed at least £100 at all times of the year.

Now even if paying by DD saves me say £50 over the course of the year it is no saving at all if I am actually paying out of my bank account an extra £100 a year or more. the saving is illusory.

Holding a credit balance of £100 costs you around £3 per annum in lost interest. Assuming you would have invested that £100, say in a Santander 123 Account.

The £100 is held on account and not lost to you. In effect it earns you savings on your energy bills by giving you access to cheaper tariffs.

The detail requested will allow us to advise on the cheapest cost alternative. I suspect you are currently on a very costly standard tariff.

System

@vet8. The saving is only illusory if the supplier intends to hold on to your overpayments. Each supplier has a refund policy, and most will action a refund at anytime provided you give them an actual meter reading. Having said that, if a customer demands a refund at the start of the Winter season, it is likely that the supplier will increase the monthly DD payment to reduce the amount of debt accrued. Not refunding overpayments would be deemed theft.

molerat

My gas supplier would charge me £452 pa paying £38 per month. I will of course likely be in credit for some time if I started now. On the other hand I could pay £770 for the same gas on a pay as I use it basis. £318 extra for them not holding on to some of my money for a little while. I don't understand some people who "need to be in control" whatever it costs them !

pathtofreedom

The reasons why they try and keep you in credit is also because no one can predict the weather. Some years it is a warm winter, last week I had to have my heating on in June which I haven't done for years. So rather than having the shock of a bill to pay later if the weather doesn't behave, that is why they keep accounts in credit.

I have managed many a time to get credit refunded though when it has been a warmer winter or whatever. If you don't like how the monthly works, as others have said look at quarterly instead but you'd still have to provide regular meter readings. It is worth doing that anyway just to be sure your estimated bills are reflecting reality just for the reasons I've already stated.

So as others have said you need to check the price per kwh when comparing, and not what the monthly dd is, as no one can predict the weather or when you might have your heating on.

vet8

backfoot wrote: »

Holding a credit balance of £100 costs you around £3 per annum in lost interest. Assuming you would have invested that £100, say in a Santander 123 Account.

The £100 is held on account and not lost to you. In effect it earns you savings on your energy bills by giving you access to cheaper tariffs.

The detail requested will allow us to advise on the cheapest cost alternative. I suspect you are currently on a very costly standard tariff.

I would not invest that £100 to earn a measly little bit of interest. I would use it far more productively to pay off other debt; credit card or even my mortgage. Basically it is my money which I do not have access to.


I frequently look to switch providers and every time I do I find that I cannot save more than about £10 per year so I must be on a pretty good deal now.